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Carrier Services
Cablevision deploying DOCSIS 3.0 against FiOS
New upgrade will help MSO defend its home market
by Doug Allen
What a difference a little competition makes! In what’s widely seen as
an effort to ward off Verizon’s FiOS initiative in the MSO’s New York
and Connecticut footprint, Cablevision has announced it’s beginning to
rollout DOCSIS 3.0 technology. The word came from company COO Tom
Rutledge over a recent analyst and media conference call, stating that
the new technology would be operational in some territories soon — no
word on specific launch markets — with the remainder to follow by year’s
end.
Together with Cablevison’s last broadband initiative — a two-year plan
to provide “free” Wi-Fi in-region access to the MSO’s high-speed
Internet subscribers (non-subscribers will probably have to pay a fee
for the service) — Cablevison’s total spend on its enhanced high-speed
access strategy is roughly US$20 million in Q2 2008, and $315 million
over three years, or about $100 per customer. Rutledge did not
announce a marketing strategy in his comments.
Why is DOCSIS 3.0 a big deal? It dramatically raises the bandwidth
capacity of HFC access by bonding multiple 6 MHz channels, boosting
total bandwidth over 100 Mbps. Compare that to current Cablevision
DOCSIS 2.0 speeds of 30 Mbps. Version 3.0 will also deliver uncapped
capacity, meaning consumers can obtain as much bandwidth as the
network will allow — though cable is still a shared medium (as opposed
to DSL in the access link), so that capacity pool will go down as
other subscribers’ use goes up.
Verizon’s FiOS (which now boasts 1.5 million Internet users) offers dedicated connections, but at this point, all service tiers come in at less than 100 Mbps. That should
change once Verizon completes its home gateway upgrades for high-speed
Internet access subscribers, which will initially deliver speeds up to
100 Mbps, and eventually, 175 Mbps (see “Verizon boosts FiOS home
networking speeds up to 175 Mbps”).
In addition to fending off FiOS, Cablevision’s DOCSIS 3.0 move also
positions itself well against other MSOs. For instance, the largest
MSO (in number of subscribers), Comcast has pledged its commitment to
DOCSIS 3.0, planning to upgrade 20 percent of its platform to 3.0 by year’s
end, and completing the rollout by mid-2010. Time Warner Cable,
another MSO with overlapping footprint, has announced plans to begin
DOCSIS 3.0 testing in New York later this year.
So how is Cablevision faring against Verizon FiOS so far? Pretty well,
it seems. Squaring off against each other in about a third of
Cablevision’s footprint, the MSO has gained net subscribers, according
to Craig Moffett, an analyst with Sanford C. Bernstein & Co. Inc. Q2
financials appear to make his case: Cablevision added 52,000 high-speed
Internet customers for a total of 2.39 million, hitting 260,000
revenue generating units, up 2.6 percent from Q1 2008. Revenue per
subscriber was also up 2.1 percent over the first quarter, to $132.29.
Rutledge noted in his call that FiOS was able initially take customers
in the “high single-digit” range during their first year in the
market, but that number comes down over after about two years.
Subscriber losses to FiOS have “slowed down to a trickle” in markets
where both Cablevision and FiOS have been available for two years or more.
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